Morgan Stanley Set to Halt Investment-Bank Hiring

Morgan Stanley, the sixth-largest U.S. bank by assets, halted hiring at its investment-banking group for the rest of 2010, a person briefed on the decision said.

The firm ruled out layoffs through the end of the year, the person said, speaking anonymously because the matter hasn’t been publicly disclosed. Jim Wiggins, a spokesman for Morgan Stanley, declined to comment on the hiring freeze. He said the company intends to hire brokers for the Morgan Stanley Smith Barney unit, a joint venture with Citigroup Inc.

The freeze, which includes the New York-based firm’s sales and trading units, comes as weak trading and equity underwriting volume may lead the five largest Wall Street banks to post their lowest revenue from investment banking and trading since the fourth quarter of 2008. Bank of America Corp. is firing as many as 400 employees in its global banking and markets division, a person briefed on the matter said last week.

Companies including Barclays Capital and Credit Suisse Group AG also have started reducing staff in Europe. Securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow, bank analyst Meredith Whitney of Meredith Whitney Advisory Group LLC said in a report dated Aug. 31.

Seven analysts including Richard Staite at Atlantic Equities LLP in London cut third-quarter earnings estimates for Morgan Stanley in the past two weeks, citing weak trading in the quarter. The average estimate is 43 cents a share, down from 57 cents, according to 20 analysts in a Bloomberg survey.

Morgan Stanley added about 400 employees to its sales and trading business since June 2009. The firm’s headcount was 62,926 at the end of June, up 3 percent from a year earlier.

Morgan Stanley declined 28 cents, or 1.1 percent, to $24.87 yesterday in New York Stock Exchange composite trading. The shares are down 16 percent this year.